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A STUDY OF CUSTOMER
RELATIONSHIP MARKETING
PRACTICES (CRMP) OF INDIAN OIL
CORPORATION(IOC)
DOCTOR OF PHILOSOPHY
IN
COMMERCE
SUBMITTED BY:
The last decade has seen the emergence of Customer Relationship Management
However, evidence suggests that many CRM initiatives fail to achieve desired
results.
Furthermore, empirical research is still scarce. In recent years, CRM has been
the favored theme for numerous studies and reports. It has also been
growing competition.
past 20 years, there is still significant disagreement about its definition and
meaning, and the framework for the effective implementation and evaluation of
profit from their growth. Maintaining relationships with customers and offering
Management (CRM) seems to offer the much needed strategy and solution to
keep customers happy, smiling and connected with the organization across
their lifetime. CRM has multiple facets and implications for the petroleum
and for keeping their loyal customers coming back to them for more. The
concern among the service providers especially retail outlets, retailers have
through many stages and made various strides to enhance its operations so
that members and the general public are benefiting from in a broad
inefficiencies. Based on this concern, the study meant to establish the factors
Two key objectives motivate the GoI’s policy in India’s downstream petroleum
sector:
(a) Ensuring India’s growing refined product demand is met at affordable prices
over time; and (b) establishing India as a major global refined product exporter.
Aside from its fiscal implications, India’s current petroleum product pricing
regime has implications for the achievement of these goals, and for the
The study used both primary and secondary data as its source and semi
collected data will be edited for analysis. In depth open-ended questions were
used to collect the data. The analysis of the data gathered went through two
main stages. The first stage was to transcribe the data collected from all the
organizations chosen and produce detailed write-ups for each case. In every
case the write-ups were similarly structured to help the researcher in the
second stage, the cross-case analysis. The cross-case analysis was based on
implications of the various petroleum policies. Our findings reveal three major
the gross domestic product (GDP), foreign direct investment, and employment
levels.
The statistical results indicate that not all CRM activities make contributions to
this study, which is the purpose for the achievement or disappointment of CRM
activities in diverse organizations from the management viewpoint, with the
Directing hypotheses and models are in short supply in the field, most likely
because of the truth that it is another range for examination and due to its
trade with IT and data systems, which have been quickly creating. The focal
examination question for this study is: Why and how do CRM activities succeed
then again fall flat? Inquire about around there will help building flourishing
The aims and objectives will be researched in the Indian Petroleum Corporate
Sector, which are Indian Oil, Bharat Petroleum and Hindustan Petroleum
Corporation Limited, IBP Company Limited, MRPL, BRPL, AOD all Government
order to arrive at an empirical outcome of the study, the data collected from the
customers shall be analyzed, which was collected from the Sample data
collected directly from the customers in the National Capital Region (NCR).
Data has been taken from company’s internal records, from Government of
India records and also from sources, which from petroleum company point of
view were authenticate and relevant. The basic aim of the research is to
understand the significance of CRM for the chosen corporate and its relevance
in current business strategic context. From the collected data, it was seen
RESEARCH HYPOTHESIS
the theoretical structure. These relationships between the variables are the
significant concerns of the study. The study is principally focused around the
commence that the services by the oil organizations are the -free variable- and
fulfillment of the customers at the retail outlet in different company is the ward
variable.
the company under study is the ward variable. In the study, to land at the
uniform base of the execution of the oil organizations, sales and profit before
premium and expenses, Sales Volume and Market Share. The dependendent
speculations as specified below are intelligent of this reason and are tested in
station.
version of the questionnaire items however were modified to fit this particular
context of research and thus they had gone through pilot testing and
evaluation.
variables with apparent low predictive value, and (3) a questionnaire easily
respondents will not find it difficult and boring to answer all of them.
pretests and checked twice by the supervisor. One of the major concerns of the
study was response rate. From discussion of availability, response rate was
increase the response rate and at the end the trade-off was made.
The Pilot Study - every questionnaire should be pretested. For this reason, the
pilot test were sent personally to the various service stations at surrounding
area.
testing, they were asked to responds to what they thought about the questions
and other suggestions for improvement found during the test was taken
the overall industry as a whole. For the analysis of control variables (mostly
profiles.
VARIABLES.
measures and the surrogate variables, and to test hypotheses detailed in the
research literature, the data were further subjected to multiple correlation and
regression analysis. This statistical technique was chosen because it allows the
examined while controlling for the effects of the other independent variables.
the 'stepwise method', and the technique starts by regressing the variables with
It has greater potential for capitalization on change and it can produce results
variable inclusion, only five variables entered the equation. However, when the
limit was relaxed to 0.10, there are six variables was entered the step-wise
regression equation. The results also improve R2 from 0.84 to 0.86 and reduce
the standard error from 0.78 to 0.75. From this test and discussion in section
7.3.1 above, the 0.10 level of significance was the selected level for the
level of significance was chosen because this study used a small sample and
the researcher was afraid that some of the important variables will be excluded
if using the higher level of significance such as 0.01 or 0.05 level of significance
(as shown from the test mentioned above). Moreover, a few retail researchers
especially in petroleum retailing such as Ingene and Brown (1987) and Acar
earlier. The hypotheses are divided into two groups: the internal environmental
factors (manager and store) and the external environmental factors (location
and competition). The former reflect the "controllable factors" and the latter
was to establish a basis for future rigorous hypothesis testing. Using these
this research, the first approach suggested byGhosh and Me Lafferty (1987) will
regression in order to put all variables in one equation. The variables used in
CONCLUSIONS
Refinery is an energy intensive industry, where electricity, steam, fuel oil & gas
are used as the main sources of energy. Basic source of above forms of energy
is hydrocarbon (petroleum
which in turn contributes in minimizing fuel and loss (OFL) and thereby
the profitability. Maximizing sells of products can increase profit; of course, the
Energy companies will need to build sound investor and analyst relationships
and convince capital markets that they have clear strategies to succeed if they
wish to avoid lower share prices. Retailing activities will separate from back
A STUDY OF CUSTOMER
RELATIONSHIP MARKETING
PRACTICES (CRMP) OF INDIAN OIL
CORPORATION(IOC)
DOCTOR OF PHILOSOPHY
IN
COMMERCE
SUBMITTED BY:
has been the favored theme for numerous studies and reports. It has
about its definition and meaning, and the framework for the effective
models.
2
The concept of CRM is premised on a simple logic of business- it must
and connected with the organization across their lifetime. CRM has
and for keeping their loyal customers coming back to them for more.
organization.
especially retail outlets, retailers have their own way of managing their
3
Customer Relation Marketing in the Petroleum industries in India has
passed through many stages and made various strides to enhance its
operations so that members and the general public are benefiting from
petroleum sector:
The study used both primary and secondary data as its source and
the data gathered went through two main stages. The first stage was
to transcribe the data collected from all the organizations chosen and
produce detailed write-ups for each case. In every case the write-ups
4
were similarly structured to help the researcher in the second stage,
levels.
process. The statistical results indicate that not all CRM activities
5
TABLE OF CONTENTS
TABLE OF CONTENTS 06
LIST OF FIGURE 10
LIST OF TALBE 11
CHAPTER – 1: INTRODUCTION 12
MARKETING 20
MANAGEMENT 43
2.1 : INTRODUCTION 53
6
2.2 : SUSTAINABILITY 55
7
CHAPTER – 5: LITRATURE REVIEW 164
MARKETING 170
LOYALTY 180
8
CHAPTER – 7: RESEARCH ANALYSIS 209
REFERENCES 251
QUESTIONNAIRE 265
9
LIST OF FIGURES
Page
No. Description
No.
10
LIST OF TABLES
Page
No. Description
No.
11
CHAPTER – 1
INTRODUCTION
MARKETING STANDARD
Customers in the current period are a great deal more engaged today
and selling to them obliges a far more key methodology which CRM
empowers firms to alter offerings for customers and when offerings are
says and what else is thought about that customer (Peppers, Rogers
1 Peppers, Rogers and Dorf, (1999), “Is Your Company Ready for One-to-One Marketing”Harvard
Business Review, 77, p.p 151–160.
12
further distinguishing deliberately critical customers (Buttle, F.,
2 Buttle, F., (2001), “The CRM Value Chain,” Marketing Business, p.p 52–55 Retrieved January 25, 2008.
3 Gartner group., (2008), “Worldwide CRM Software Market to Grow 14% in 2008(online), Available at
http://www.gartner.com/it/page.jsp?id=653307.
13
information about customer conduct and inclination and to creating
needs that were basically nature made. Later in the seventies, the
'particular answers for the needs and were the conclusion of the
14
marketing activities. Marketing contemplations of the eighties gave
themselves to meet the higher, more way of life situated requests and
decent conveyance system were sufficient in the 80's and 90's. On the
that a considerable lot of these are in the services sector. The lodging
15
Customer Relationship Marketing has numerous ramifications for
to six times to the extent that get another customer as it does to keep
16
objective must be to build sales volume and brand esteem in the
7Anton, John 1999, Customer Relationship Management, Prentice Hall, Upper Saddle
River, NJ.
8Sheth, .Iagdish N. and Atul Parvatiyar (2000), Handbook of Relationship Marketing, Thousand Oaks, CA:
Sage Publications.
9Agrawal, M.L (2002), ‘Customer relationship management (CRM) and corporate renaissance, 2002
17
terminate or outsource relationships with unprofitable customers
(Reichheld, 1996)10.
around them, and implementing and monitoring projects for the total
10Reichheld,F.F. and Teal, T. (1996), The Loyalty Effect: The Hidden Force behind Growth, Profits, and
Lasting Value, Harvard Business School Press, Boston, MA.
18
customer fulfillment and decreased customer turnover, service cost
the deal and turns into the basic element in the purchaser's decision
of the vender next time around' and the 'deal only consummates the
characterized the relationship has been, which thus relies on upon the
exchange has been at the core of all CRM studies. Gronroos (1994)11
2002)12 also echoed the same and defining that mutual exchange and
11Groonroos, Christian 1994, "From Marketing Mix to Relationship Marketing: Towards a Paradigm Shift
in Marketing' , Marketing Decision, 32(2),4-20.
12Christopher, M., Payne, A., & Ballantyne, D. (2002). Relationship marketing: Creating stakeholder
Radhakrishnan, S.Palaniswami, P. V. Mohanram and J .Kanchana (Eds), Logistics and Supply Chain
Management, New Delhi: Allied.
19
2000)14reported that interpersonal relationships between buyers and
Advertisers began the new thousand years in one of two groups: the
marketing projects to make and fortify brand loyalty. They put to the
(CRM) might not need to—yet. Anyhow they will. They will in the event
that they are to get by in this thousand years, on the off chance that
unavoidable losses from the marketing waves that went before CRM.
14Gruen, Thomas W., John O. Summers, and Frank Acito (2000), “Relationship Marketing Activities,
Commitment, and Membership Behaviors in Professional Associations,” Journal of Marketing, 64 (3),
34–49.
20
There are three such waves, which, all in all, have driven marketing
messages.
21
doors for such global brands as Levi's, Coca-Cola, McDonald’s,
15 Slater, Stanley F. and John C. Narver, “Superior Customer Value and Business Performance: The
Strong Evidence for a Market-Driven Culture,” Marketing Science Institute, Cambridge, MA.
16Nevin John R. (1995), .'Relationship Marketing and Distribution Channels: Exploring Fundamental
the network for the mutual profit of both sides, through intuitive,
17Vavra, Terry G. (1992), Aftermarketing: How to Keep Customers for Life through Relationship
Marketing, Home.wood, IL: Business One-Irwin.
18Shani, D. and Chalasani, S. (1992), ‘‘Exploiting niches using relationship marketing’’, The Journal of
first and moving the part of marketing from controlling the customer
function are symptomatic of the CRM. Arndt gave the following driving
19McKenna, Regis (1991), Relationship Marketing: Successful Strategies for the Age of the Customers.
Addison- Wesley Publishing Company.
20Berry, L. (1995), "Relationships marketing of services, growing interest, emerging perspectives", Journal
Perspectives in Service Marketing, American Marketing Association, Chicago, II, pp.- 25-8.
22McGarry, G. 1953, 'Some Viewpoints in Marketing', Journal of Marketing, 17(3), pp-36-43.
24
concentrating on discrete trade and termed this marvel as "tamed
markets". The last push to CRM was given by none other than the
much lower than cost of obtaining new ones. In the same way,
among organizations.
25
worth" of the customer rather than a single transaction. Customer
the relationship that exists between the brand and its customers-
with individual customers, and after that sharing the profits over a
and chose customers for shared quality creation also sharing through
Not at all like most advertising, CRM does not end with getting the
maintenance, cross selling and that's only the tip of the iceberg. When
a deal is made, companies ought not kick back and lose the chance of
period is over and offer to redress any issues that may have sprung
up. This is an open door not just to remind the customer that you
26
mind additionally to make referrals, repurchase or offer a related
item/ administration.
to "customer delight". On the off chance that a fly out office had the
time at the right cost. In the event that they could organize an
additional couch for the 5-year old without being asked and even get a
pizza conveyed at the doorstep when the gang returns from the
representative.23
wave. While advertisers have since a long time ago saw brands as
23Desatnick, Robert L. and Denis H. Detzel, Managing to Keep the Customer, Jossey-Bass, San Francisco,
p. 8.
27
stakes, the true stake is brand loyalty. A brand is not an advantage.
inferred that it "costs five times to the extent that supplant an average
24Band, W.A., Creating Value for Customers, John Wiley & Son, Toronto, pp. 11-12.
28
As Frederick F. Reichheld and W. Earl Sasser Jr. finish up in their
effect on how the money adds up," the writers compose. Loyalty can
research studies have shown not all customers are equally profitable
26Storbacka, Kaj (2000), "Customer Profitability: Analysis and Design Issues," in Handbook of
Relationship Marketing, Jagdish N. Sheth and Atul Parvatiyar, Eds., Thousand Oaks, GA: Sage
Publications, pp. 565-586.
30
culture. When organizations implements customer-centric business
service, and co-ordinates and unifies all points of interaction with the
31
requires a customer-centric business philosophy and culture to
Albeit marketing practices could be followed back the extent that 7000
picked up force, and created through the initial seventy five percent of
brokers do not physically see, feel, touch items however just go about
as executors and take title to the products for financing and danger
sharing.
Similarly as with every new shift in the center of marketing, there are
Then again, in the same path as Kotler (1972, p. 46)29 saw about
29 Kotler, P. (1972), A Generic Concept of Marketing, Journal of Marketing, Vol. 36 April, pp. 46-54.
33
the late meetings hung on this subject (Sheth and Parvatiyar 1994);
(ii) its degree is wide enough to cover the whole range of marketing's
correction and overhauling its principal learning (Bass 1993); and (iv)
Kotler 1994)31,32.
antecedents going back into the pre-industrial era, Much of it was due
bonding between the producer and the consumer, It was only after
Parvatiyar, A. (Eds); Relationship Marketing: Theory, Methods and Applications, Center for Relationship
Marketing, Emory University, Atlanta.
32Kotler, P. (1994), Marketing Management: Analysis, Planning, Implementation, and Control. Prentice-
marketing, and item utilize related services with little help structure
35
on the Internet all authenticate the developing shopper enthusiasm
bond between the service supplier and the service client additionally
1995)34.
An alternate energy driving the reception of CRM has been the change
JIT, MRP, ISO, six sigma and so forth. At the point when organizations
Along these lines, a few organizations, for example, Maruti, IBM, HP,
34Bitner,M.J. (1995), "Building service relationships: its all about promises", Journal of Academy of
Marketing Science., Vol. 23 No. 4, pp. 246-51.
36
projects, for example, in the nick of time (JIT) supply and Material-
than to compete for new ones. On the supply side it pays more to
keeping customers for life, rather than making a one-time sale. There
who is loyal and committed to the firm and its offerings (Naidu, et. al.,
1999)36 .
Also, customer expectations have rapidly changed over the last two
35Frazier,
Gary L., Robert E. Spekman, and Charles O'Neal (1988), "Just-in-Time Exchange Systems and
Industrial Marketing," journal/ of Marketing. 52 (October), pp. 52-67.
36Naidu G.M., Atul Parvatiyar, Jagdish N. Sheth and Lori Westgate (1999), "Does Relationship Marketing
Pay? An Empirical Investigation of Relationship Marketing Practices in Hospitals," 46 (3), pp. 207-218.
37
of ever changing customer expectations, cooperative and collaborative
for their own use, they began giving back to their customers not only
This was the beginning of the now familiar frequent flyer programs,
bonus points on credit cards and a host of other resources that are
CRM was now being used as a way to increase sales passively as well
and customer was coined and was looked to be marketing tool for all
they could evaluate not only concrete statistics, but also information
37Bickert, Jock (1992), "The Database Revolution," Target Marketing, (May), pp.14-18.
39
An alternate slender, yet important, perspective is to consider CRM
with singular consumers and to ceaselessly fortify the system for the
valueadded contacts over a long time of time" (p. 44). Jackson (1985)39
customer first and shifting the part of marketing from controlling the
38Shani, D. and Chalasani, S. (1992), ‘‘Exploiting niches using relationship marketing’’, The Journal of
Consumer Marketing, Vol. 9 No. 3, pp. 33-42.
39Jackson, Barbara B. (1985), Winning and Keeping Industrial Customers: The Dynamics of Customer
of Insight Coaching to Improve Relationship Selling," journal of Personal Selling & Sales Management,
(Winter), pp. 59-64.
41McKenna, Regis (1991), Relationship Marketing: Successful Strategies for the Age of the Customers.
25).
states:
41
trade and satisfaction of guarantees" (p. 138). The ramifications of
relationships."
conduct on the off chance that they have a long haul introduction and
42Morgan , Robert M. and Hunt, Shelby D. 1994, 'The Commitment - Trust Theory of Relationship
Marketing', Journal of Marketing, 58 (3), pp-20-38.
43Dwyer, F. Robert, Paul H. Schurr, and Sejo Oh (1987), “Developing Buyer–Seller Relationships,” Journal
42
An alternate imperative aspect of CRM is "customer selectivity." As a
MANAGEMENT
projects are gathering desires and in the event that they are
may not be fitting in the connection of CRM. Actually when more CRM
43
over all CRM programs, especially when the reason for each one
system is diverse.
the customer's share of the business may not be proper. For this
44 Kaplan, R. S. & Norton, D. (1992, January-February), “The Balanced Scorecard –Measures that Drive
Performance.” Harvard Business Review, 70, 71-79.
45Srivastava, R. K., T. A. Shervani, and L. Fahey (1998), “Market-Based Assets and Shareholder Value,”
44
agreeable and community oriented relationship with customers is
the idea of the brand value of the firm and thus numerous researchers
connected on both sides of the dyad. Since both the customer and the
marketing firm need to perform keeping in mind the end goal to create
the precursors, they can give rich data on their determinants and
yet another view of CRM with reference to profitability Fox & Stead,
46Reichheld, F. and Sasser, W.E. (1990), "Zero defections: quality comes to service", Harvard Business
Review, Vol. 68 No. 5, pp. 32-40.
47Fox, Tricia, and Steve Stead (2001), “Customer Relationship Management: Delivering the Benefits,”
White Paper, CRM (UK) Ltd. and SECOR Consulting Ltd., Stirling and Surrey, UK.
46
Customer profitability is developing as an important measurement in
customer.
practice profitability data on the customer level are by and large not
its all said and done, profitability lies at the heart of the marketing
revenues less the costs which one specific customer generates over a
given time of time. All things considered, this variable alludes to the
(horrible commitment edge), i.e. sales revenue less all item related
costs for all items sold to an individual customer amid one specific
The other is customer profitability, which often takes the form of the
48RustRT, Zahorik AJ & Keinigham TL, 1996, Service Marketing, HarperCollins, New York Taylor SE,
1991, Asymmetrical Effects of Positive and Negative Events: The Mobilization- Minimization Hypothesis,
Psychological Bulletin, Vol. 110, No. 1, 67-85
49Homburg, Christian and Christian Pflesser (2000), “A Multiple- Layer Model of Market-Oriented
1994).
50Gupta, Sunil, Donald R. Lehmann, and Jennifer Ames Stuart (2004), “Valuing Customers,” Journal of
Marketing Research, 40 (February), 7–18.
51Jayachandran, Satish, Kelly Hewett, and Peter Kaufman (2004), “Customer Response Capability in a
Sense-and-Respond Era: The Role of Customer Knowledge Process,” Journal of the Academy of
Marketing Science, 32 (Summer), 219–33.
52Mithas, Sunil, M.S. Krishnan, and Claes Fornell (2005), “Why Do Customer Relationship Management
the conviction that the usage of CRM activities prompts firm value.
shows that one of the business units she studied was able to achieve
53Ryals, Lynette, and Simon Knox (2001), “Cross-Functional Issues in the Implementation of Relationship
Marketing Through Customer Relationship Management,” European Management Journal, 19 (5), 534–
542.
51
for companies that have good relational information processes in
place. all use data collected within a single firm over time to develop
that one major element in any CRM system is the measure relate to
the value creation process. Thus, good CRM process measures provide
the firm with the opportunity to gain deeper insights into how these
54Gustafsson, Anders, Michael D. Johnson, and Inger Roos (2005), “The Effects of Customer Satisfaction,
Relationship Commitment Dimensions, and Triggers on Customer Retention,” Journal of Marketing, 69
(October), 210–18.
55Payne, A. F. T., & Frow, P. (2005).A Strategic Framework for Customer Relationship Management.
2.1 INTRODUCTION
Indian Oil, ‘The Energy of India’ has always been fulfilling nation’s
energy demand, which is the basic need for any country’s growth and
Indian Oil with over 34,000 strong workforce, is meeting the growing
tomorrow.
Fortune ‘Global 500’ listing at 88thrank in year 2013. Indian Oil and
53
its subsidiaries own and operate 10 of India’s 22 refineries and its
gas pipelines, which is the largest in the country. Indian Oil has a
Indane,
producing Shale Oil condensate asset in USA has been acquired along
54
operator in Cambay Blocks, Indian Oil is gaining valuable experience.
2.2 SUSTAINABILITY
55
In developing plans for the future, we are mindful of our influence on
and waste generation were carried out on ‘as is’ basis. Additionally,
during the year, energy audit of office buildings was carried out in
Following tables show our performance of the last year and our target
56
Table 2.1: Performance (Last Year) and Target (Next Year).
fuel energy is the key business enabler to reduce GHG. Our first on
on-
57
Figure2.1: Total Generation of Renewable Energy.
during the year using the technology developed by our R&D Centre.
generation by 2017.
Policy –
58
In pursuit of this Policy, Indian Oil is committed:
• To enrich quality
ality of life of communities around its locations
sustainable practices
initiatives
performance.
and efficient conduct of the affairs of the company and also help in
Board Profile –
60
All our Directors belong to General category and are above 50 years of
age. The Board members are persons with proven record in diverse
Board
rd on various issues and details of the Board meetings held during
2012-13
13 are depicted in our annual report.
61
Ethics and code of conduct –
resolution.
related to sexual harassment were filed and were dealt as per rules.
institutions.
Sustainable Procurement –
62
prefer any local vendors for our procurement process as it is done on
Risk Management –
Indian Oil has laid down the Enterprise Risk Management Policy and
including climate change related risks) and are categorized as ‘A’ and
the Board.
Human Rights –
63
Indian Oil follows high standards of human right values. All of our
Canteen facilities and medical precautions are must for both women
gender, caste, creed, religion and race. All our locations are monitored
Indian Oil has implemented the provisions of the Disabilities Act 1995
64
Anti-Corruption and Anti – Competitive Behavior-
Indian Oil consistently works against corruption in all its forms. Our
complies with all government policies. Since last 5 years, two cases
65
Marketing Companies, for collusive bidding against tender of NACIL
for ATF supplies. The Delhi High Court has stayed the proceedings
before CCI. In another case a party has alleged on- competitive price
Group.
For the Indian economy, the year was marked by slowing growth and
clearances and acted as major drag on the growth. High oil, coal and
66
gold imports coupled with decline in exports contributed significantly
year provisionally estimated at 4.9 percent of GDP was lower than the
hand, there were positive developments such large scale gas finds in
production front, especially in the US and the boom in the global LNG
sector.
Crude oil prices also moderated on an average during the year and
while natural gas prices fellin USA, they rose in Europe & Asia. On the
67
Percent in the US. As regards, the Non-OECDcountries, consumption
Petroleum products, after coal are the largest source of meeting energy
market, with its pan India sales network being its major strength. The
68
year witnessed significant changes in the policy domain, which are set
Optimization.
high growth potential and has been growing at impressive rates. The
equity for the employees in respect to their career paths are thrust
areas for the Corporation. A major challenge that has emerged in the
context of the changing business realities that are set to play in, as
70
Hawaii. The 9th May 2013 reading of the observatory was first notified
to break the symbolic milestone of 400 parts per million which was
later revised to 399.89. This might be taken in the context that at 450
PPM, it is predicted that the global temperatures will rise by 2°C above
increased risk of drought, rising seas, more heat related illness and
future generations.
A total of 120 schemes with estimated savings of1, 20,000 SRFT have
71
• Optimization of Hydrogen use and improved recovery through PSA
gas compressors.
72
Figure2.4:: Estimated savings of Standard Refinery Fuel in Tones
(SRFTs).
• The use of variable frequency drive for mainline pumping unit and
lowest of 57 in 2011
2011-12. This has been possible through
been awarded the ‘Green Building Certification and Gold rating’ under
The Award heralds a new era and the first major step of Indian Oil
towards greening of its habitats, since these are among the first
74
2.6 SOCIAL RESPONSIBILITY
Indian Oil’s CSR related objectives are aptly enshrined in its CSR
goals are "…to help enrich the quality of life of the indigenous
Drinking Water are the CSR thrust areas ofIndianOil. The key
and stakeholders.
Corporate Citizen.
75
Policy guidelines provided by the Board Committee on CSR and
welfare initiatives viz. health & medical care, education and clean
Oil’s CSR investment was Rs. 78.97 crore. No significant fines were
reporting year.
76
preserve and promote national heritage. Having initially taken up the
in this jail during the freedom struggle, IOF has been assisting ASI &
participants.
77
CHAPTER – 3
Energy is one of the major inputs for the economic development of any
Primary energy sources are those that are either found or stored in
nature. Common primary energy sources are coal, oil, natural gas,
secondary energy sources; for example coal, oil or gas converted into
steam and electricity. Primary energy can also be used directly. Some
energy sources have non-energy uses, for example coal or natural gas
78
energy consumption amounts to only 40 percent of the world total
energy consumption.
population growth in the developing countries has kept the per capita
people use four to five times more than the world average and nine
total primary energy production. Over the years, there has been a
Energy Supply-
Coal Supply - India has huge coal reserves, at least 84,396 million
amounts to almost 8.6% of the world reserves and it may last for
contrast, the world's proven coal reserves are expected to last only for
end of the year are divided by the production in that year, the result is
the length of time that the remaining reserves would last if production
India is the fourth largest producer of coal and lignite in the world.
the world and will soon overtake Korea as the third largest consumer
of oil in Asia after China and Japan. The country's annual crude oil
India will have to pay an oil bill of roughly $50 billion, assuming a
total export of $64 billion, oil imports accounted for $21 billion. India
80
imports 70% of its crude needs mainly from gulf nations. The majority
of India's roughly 5.4 billion barrels in oil reserves are located in the
respectively. India spent more than Rs.1, 10,000 crore on oil imports
Natural Gas Supply - Natural gas accounts for about 8.9 per cent of
around 200 mcmd. Natural gas reserves are estimated at 660 billion
cubic meters.
2,720 MW- nuclear and 1,869 MW- wind (Ministry of Power). The
units (kWh).
81
reactors at five nuclear power stations producing electricity. More
Hydro Power Supply - India is endowed with a vast and viable hydro
potential for power generation of which only 15% has been harnessed
84,000 MW.
The per capita energy consumption is too low for India as compared to
India was the fourth-biggest vitality buyer in the world after China,
what's more Russia in 2011, and its requirement for vitality supply
The BJP, chose as the greater part party in May 2014 to oversee India
directed fuel costs for consumers, fuel subsidies that are shouldered
fluids, and natural gas have directed value structures that debilitate
private venture.
petroleum and natural gas priest, Veerappa Moily, declared that his
83
service would take a shot at an activity plan to make India vitality
natural gas pricing changes. The current petroleum and natural gas
consumption.
India as of now started executing oil and gas pricing changes in the
quadrillion British warm units (Btu). The nation has the second-
World Bank data. In the meantime, India's for every capita vitality
request in the long term as the nation proceeds with its way of
customary biomass and waste. Since the start of the New Economic
electricity with natural concerns from the utilization of coal and other
85
biofuel mixes, and create more prominent utilization of mass travel
energy and particularly petroleum shall also increase. The GDP shall
years.58
The Indian petroleum industry goes once again to 1890 when oil was
until the 1970s when the most productive and critical Indian creating
generation sector stayed under the state control until 1991, the
point, more refineries were set up in the late 1950s and early 1960s
items like gasoline and flying fuel. Diesel costs were kept impartial.
87
petroleum items. Likewise, petroleum item costs were kept up at an
petroleum items e.g. LPG, naphtha, Aviation fuel, fuel oil and so on.
after the United States, China, and Japan in 2013, and it was
items. The hole between India's oil request and supply is widening, as
interest arrived at about 3.7 million barrels for every day (bbl/d) in
88
transported in crude oil has headed Indian energy companies to
companies (NCOs) have acquired value stakes in abroad oil and gas
fields in South America, Africa, Southeast Asia, and the Caspian Sea
dominant part of imports keep on going from the Middle East, where
Fig 3.2: India petroleum and other liquids production and consumption,
2000-15.
in India has been rising rapidly, and India is now the fourth largest
when the oil prices rise. Thus, estimations of crude oil demand and
coal, crude oil, natural gas, hydroelectric, solar, wind, and nuclear
energy. Out of India’s total energy consumption, crude oil accounts for
24 per cent, natural gas 6 per cent, coal 40 per cent, combustible
renewable and waste 27 per cent, hydroelectric power 2 per cent, and
nuclear energy and wind energy about 1 per cent each; solar energy
has an insignificant share (IEA 2008). Thus, crude oil and coal
nearly 3.25 million barrels of crude oil per day in 2010 and was the
fourth largest consumer of oil in the world next to the US, China, and
Japan. Of this, 70 per cent (nearly 2.2 million barrels per day) was
90
the fourth largest net importer of oil in the world by 2025 after the US,
The petroleum business in India has been nearly managed: the Goi
business in the first 50% of this century. Striking among these were
was that all alone; markets would not give supply security or lead to
Under the APM, all substances are guaranteed a base return on their
59Adams,F. Gerard and Shachmurove, Yochanan (2008), ”Modeling and forecasting energy consumption
in China: Implications for Chinese energy demand and imports in 2020”, Energy Economics, 30, 1263-
1278.
91
utilized capital, the downstream companies get 12% (post tax) on their
total assets.
After Coal, Oil is the biggest energy hotspot for the nation with a share
crude oil has not been expanding in coupled with consumption and
interest for petroleum items. For a developing economy like India, this
and 10.91 MMT LNG against 171.7 MMT and 11.63 MMT
shift in energy blend from oil to natural gas, the share of natural gas
following few years, India will need to improve its energy security by
ventures will must be made in the local upstream industry and to gain
steps have as of now been taken, with the petroleum pastor, affirming
raising crude oil yield from Barmer oilfield in the state of Rajasthan,
2030.
In 2012-13 India relied on upon outside crude oil to meet 84.5% of its
2012-13, high velocity diesel oil represented 43.98%. This was trailed
93
products in lesser figures come 2660 tons and highest figure goes to
15744 tons, whereas the lowest percentage shows as 1.7 of LPG and
lesser figures come 399 tons and highest figure goes to 69174 tons,
figures come 79 tons and highest figure goes to 2103 tons, while the
petroleum coke goes to 62.1 percent. The general rate in lowest come
60Chemin, Elodie Sentenac (2012), “Is the price effect of fuel consumption symmetric? Some evidence
from an empirical study”, Energy Policy, 41, 59-65.
94
Table-3.1: Product-wise Consumption of Petroleum Products 000’
tones @ growth.
With the Backdrop on the Energy and oil situation, and numerous
the key elements have been referred to in the writing study towards
95
Indian Oil Corporation
claimed oil and gas corporation with its central command in New
the Fortune Global 500 rundown, and the biggest public corporation
Indian oil and its subsidiaries represent a 49% share in the petroleum
limit of 65.7 million metric tons for every year. In FY 2012 IOCL sold
Indian Oil Corporation was framed in 1964, with the merger of Indian
Refineries Ltd.
As of late Indian Oil Corp (IOC) has raised $500 million by offering 10-
year dollar-designated bonds, it’s fourth such issue abroad in the last
The principle products of Indian Oil are petrol, diesel, LPG, auto LPG,
Indian Oil works the biggest and the greatest network of fuel stations
in the nation, numbering around 20,575 (16,350 general Ros & 4,225
accounts for around 40.4% share of national refining limit. The group
refining limit is about 60.2 MMT p.a. The company possesses and
including 1,422 Kisan Seva Kendra outlets for rustic customers, 6,873
It works brands like Xtracare, Swagat and Kisan Seva Kendras in the
petroleum retail section and Indane LPG, SERVO Lubricants, Auto gas
imports.
98
Indian Oil has speculation arrangements of Rs 432.5 bn for the
following five years. By 2011-12, the Indian Oil Group, with 80 MMT
watched that throughout the years a few need based modules were
99
Standardization. The undertaking was to be finished in 29 months
Consultants, chose SAP/R3 along with the related oil and gas
planning.
100
is working to emerge as a major player in the petrochemicals business
500 rankings of the world's greatest corporations for the year 2013.
player in the South Asian market was the Burmah Oil Company.
developed out of the endeavors of the Chef Rohit Oil Company, which
101
had been shaped in 1871 to refine unrefined petroleum delivered from
Kerosene.
Sachar and Prashant Bhushan said that the best way to disinvest in
63SAMANWAYA RAUTRAY AND PHEROZE L. VINCENT (March 4, 2011)."Feather in cap for graft
fighters".The Telegraph.Retrieved 2012-04-26.
102
Hindustan Petroleum Corporation Limited
about 20% Marketing share in India among PSUs and a strong market
exports) are 15.78 Million Metric Tons (MMT) and 30.32 MMT
1966 with crude oil processing capacity of 2.5 Million Metric Tons per
103
process units, the refining capacity has been augmented to present
project.
VGO HT, DHT Sulfur Recovery Unit (SRU), Hydrogen Generation Unit
104
The feed to the Delayed Coker Unit is Vaccum Residue (VR) from
then flows into the bottom of the Cokerfractionator. The feed is joined
by the bottom liquid of the fractionator’s i.e recycle oil. The combined
is fed to the coke drum, the hot feedcracks to form coke and cracked
products. The cracked products leave from the top of the coke drum
LPG,Naphtha, Light Coker Gas Oil (LCGO), Heavy Coker Gas Oil
(HCGO) and Coker Fuel Oil. Coker Gas is sent to Fuel Gas treatment
unit and finally to the Fuel Gasheader for use as internal fuel. LPG is
Assam Oil Company Ltd. (AOC) was one of the earliest enterprises in
105
Railway & Trading Company (Originally formed with the object of
drilling for oil, later on Assam Oil Company was created to carry out
oil industry in South Asia for about a century through its subsidiaries
and in discovery of oil in the middle east though its significant interest
Myanmar. Assam Oil Company was taken over by the BOC in 1910,
and between 1910 and 1930, the BOC carried out extensive
in India and started geophysical survey. Due to World War II, all
under the banner of Assam oil Division (AOD) and is the marketing
the year 1965.The Company has two refineries one at Manali with a
106
Gas, Motor Sprit, Superior Kerosene, Aviation Turbine Fuel, High
System.
Iranian Oil Company (NIOC) having a share holding in the ratio 74%:
107
Companies and Banks on 19th May 1992, thereby reducing its
Fuel Oil, Hexane and Petrochemical feed stocks. The Wax Plant at
108
supply petrochemical feedstock to neighbouring downstream
Benzene. The crude throughput for the year 2012-2013 was 9.742
million metric tons (MMT). The company’s turnover for the year 2012-
13 was Rs.46842.47 cores and the Profit after Tax was (Rs.1766.84
crores)
the second largest Indian company in terms of net profit and the third
109
Due to these capabilities, ONGC currently produces ~80% of India’s
March 2013, its market capitalization was INR 2.6 trillion (US$
the largest profit making PSU in India. ONGC has been ranked 357th
the year 2012. It is ranked 22nd among the Top 250 Global Energy
Companies by Platts.
110
India, and owns and operates over 11,000 kilometers of pipelines in
over 7.1 billion tonnes of In-place Oil & Gas volume of hydrocarbons
ONGC has many matured fields with a current recovery factor of 25-
33%. Its Reserve Replacement Ratio for between 2005 and 2013 has
been more than one. During FY 2012-13, ONGC had to share the
49.6 billion over the previous financial year) towards the under-
The story of Oil India Limited (OIL) follows and symbolizes the
From the disclosure of crude oil in the most distant east of India at
111
On February 18, 1959, Oil India Private Limited was consolidated to
grow and create the newfound oil fields of Naharkatiya and Moran in
the Indian North East. In 1961, it turned into a joint wander company
UK.
The Authorized share capital of the Company is Rs. 2000 Crores. The
Oil India Ltd. (OIL) has been assuming an important part to meet the
112
petroleum organizations and OIL, the nation needs to import oil from
the universal market. The Government of India gives attention for the
investigation action.
be made and the generation of crude oil & gas can be essentially
petroleum gas. The story of Oil India Limited (OIL) traces and
113
industry. From the discovery of crude oil in the far east of India at
3.8 MMTPA (million tons per annum) of crude oil, over 7MMSCMD of
Natural Gas and over 50,000 Tones of LPG annually. Most of this
emanates from its traditionally rich oil and gas fields concentrated in
the Northeastern part of India and contribute around 80% of total Oil
The company has over 100,000 square kilometers of license areas for
and also made discovery of oil & gasin Gabon as an Operator and
in the North-East India. OIL has set up the NEF (North East Frontier)
somewhere else in India. Indeed Digboi stayed ignored till 1921 when
Burmah Shell turned into its holder. The principal refinery was
refinery was authorized in 1901 and the first lamp fuel from it was
1921 the Burmah Oil Company (BOC) began marketing in India. The
Esso came to India on March 31, 1962 when the SVOC was
claimed by the Standard Oil Company (New Pullover). The other real
115
subsidiary of Standard Oil Company of California and Texas Oil
Company), the BOC (India Trading) Ltd, the recent working solely in
Assam and later known as the Assam Oil Company (AOC).' Thus the
whole oil industry in India was under the control of one or the other
major universal organization. This was the position in the whole non-
approximately 0.2 mmt were created in the nation and the parity was
foreign made. In 1947 the creation of crude was 2,51,100 tones. For
danger component.
116
The parity of installments issue, the developing level of oil
petroleum items amid the years after the Second World War made the
growth of the recoverable stores of both crude oil and natural gas,
especially after 'he disclosure of Bombay High. Despite the fact that
proportion lies in the way that in the event that creation proceeds at
the current level and no more holds are found, the current stores will
117
Table 3.2: Reserves and Production of Crude Oil and Natural Gas.
BPCL assessed that the current refining limit deficit of 9.8 mmt would
for POL items would be 124.1 mmt versus the present level of 64 mmt.
The venture needed to create the foundation for taking care of this
crores.
refining limit would be 11 1.6 mmt, embodying 67.3 mmt in the public
118
sector, 27.6 mmt in the joint sector furthermore 16.7 mmt in the
private sector.
proceed to stay at around 32 for every penny and the cost of oil in the
global business would not be higher than $22 for every barrel by the
installments issue, this will make the nation more powerless against
the household cost of POL items that are proportionately more than
thirteenth September, 2012), the diesel cost was raised by Rs.5 for
every liter at one go, even without any ascent in worldwide costs.
64Parikh, Jyoti., Purohit, Pallav. And Maitra, Pallavi., (2007), “Demand projections of petroleum
like Reliance and others would not get a 'level playing field' and they
would not have the capacity to contend in cost. Thusly, the present
"A business sector decided pricing framework for petrol and diesel
the oil and gas sector" (Kirit Parikh Committee Report, 2010). Before
65Bhanumurthy, N.R., Surajit Das & Sukanya Bose, (2012) “Oil Price Shock, Pass-through Policy
and its Impact on India” NIPFP working paper No. 2012-99, March.
120
the whole POL sector in India, it would be valuable to look at some
essential truths about this sector with the assistance of statistics gave
The aggregate yearly sales of all POL items by the industry in India
has been evaluated to be roughly 1480 lakh metric ton amid economic
and Essar Oil Limited (EOL) was 2037.5 lakh metric ton amid 2011-
12.
The aggregate import of crude was 1717 lakh metric ton and aggregate
imports including some petro-item imports was 1867 lakh metric ton.
The fare of petro-items was 608 lakh metric ton, making net imports
give or take 1260 lakh metric ton amid last money related year. In this
export/import of crude.
121
Vigorously oil importing nations like India would naturally be helpless
any universal oil value stun was consumed by the legislature and not
the global cost of the Indian crate of POL imports went up by 3.5
times between December 2003 and June 2008; though, the residential
costs of engine soul and high velocity diesel (HSD) in India went up by
just 1.5 times amid this period. The administration chooses the
business value and remunerates the oil marketing companies for the
deficit from the import equality cost i.e. the distinction between the
governments administered selling cost and the global cost paid if the
fact that, the import equality cost could be higher than the cost
would incline toward trading their POL items instead of selling them
This crevice between the local cost and the import equality value (or
ensured oil-bonds and direct oil subsidies. Then again, the Central
government forces extract also custom duties on oil and the state
last cost of these items and help significantly (around 20% of Focus'
exchequer.
66Chaturvedi Committee Report, (2008) “Report of the High-Powered Committee on Financial Position of
the Oil Companies”, Govt. of India.
123
It is imperative to note here that while the figuring of under
exchequer and the states get short of what 40%. The aggregate
sector to both the joined exchequer and also the focal exchequer. In
124
borne by the Omcs, yet that commitment has been continuously cut
67Economic Division, Ministry of Petroleum & Natural Gas (2012), “Basic Statistics on Indian
PETROLEUM INDUSTRY
INDUSTRY
enhanced sales.
kind groups, and includes coordinating all systems that touch the
126
customer, from charging to the call focus to sales and marketing."
While there is some union in the middle of CIS and CRM, CRM stays
office transactions.
capacities.
channels.
benefit.
127
CIS guarantees that energy companies can influence all customer data
administration.
and business customers about their services and offerings. CRM can
128
desires. By shutting the crevice between crusade execution and
As per the report cited in the BRICS*, India shall be the leading
human index. Therefore, the humans or the customers shall hold the
future of any company. In the energy sector, our focus and our efforts
monopolies and cater to clients who have very limited options in terms
information and service requests. "If you look at the number of devices
and the amount of data these companies are taking in -- both from a
opportunities.
130
standard integration objects available leading to bespoke
application development.
crews
and servicing.
131
Extend the value of IT investment by integrating with legacy core
maintenance.
132
entrant to the energy industry looking to attract customers and make
faster market changes. Table 4.1 depicts the trends that are currently
aware of and respond to market forces. It also means they must find
costs.68
68AWhite Paper on the Trends in Electricity and Other Utility Industries, Utilities Domain Competency
Group (DCG), March 2000.
133
Table 4.1: Force and impact summary.
Policy Act (PURPA) through today with the new Federal Energy
The base concept of SMD is free market pricing and open competition.
134
Understand the new market entities—mainly energy service
so on.
Apart from these, the utility usually defines its own scheme for the
new market.
Deregulation and its inherent risk of customer churn are forcing the
what are the evaluation criteria you should use? When evaluating
campaigns.
business processes.
Ultimately, you need a solution that will enable you to manage costs,
136
between solutions and the impact it will have on your business (see
Table 4.2).69
69Turning Down the Heat on the Utility Call Center, Meta Group Research, January 17, 2002.
137
industry. Today, CRM can make a marked difference in fostering more
integrating all systems that touch the customer, from billing to the
office transactions.
profitability.
139
While legacy systems limit the ability for service agents to react
140
Fig 4.1: Factors Impacting the Change in Petro-Retailing
been the backbone of the Indian economy and were situated up with
141
CPSES work in five sectors/ related groups, in particular, i)
Services.
Crude Oil in the mining sector, ii) Petroleum (Refinery and Marketing)
Crude Oil and Natural Gas is an alternate industry inside the mining
industry has seen huge change with private players steadily picking
incorporate Oil & Natural Gas Corporation (ONGC) and Oil India
generation individually
Among the non CPSES, the key players incorporate private majors
Corporation, Cairn Energy India Ltd, Essar Oil Ltd, and so on.
142
ONGC was consolidated in 1993 and is occupied with
generation in FY 2009
Globally, ONGC positions third among the Oil & Gas investigation
and creation companies in the world and is 23rd among the main
as far as net benefit in FY 2009 among all the CPSES with the net
143
With a perspective to protect itself from the inborn danger of E&p
Among the non CPSES, the key players incorporate private majors
IOC was fused in 1964 with the order to serve the national
144
nation's independence in Oil refining. It is presently the biggest
IOC has been presented ‘maharatna' status and helped about 21%
and duties. Further, the organization was among the ten most
petrochemicals
according to the Auto fuel policy of the Government, IOC has set
which results are delayed and rarely reach the intended respondents.
remain undetected.
Respondents are harder to find, they have busy schedules, and most
talk to, how and when you conduct the survey and what you do with
the results.
146
Customer Relationship Management. The oil industry
Entry of new entrants like SHELL, RELIANCE, NRL, ESSAR etc have
strategies have been formulated at the drawing boards of all the oil
and newer formats are being planned to entice the customer. While
147
The market offered little scope for differentiation due to the nature of
there was still the need to improve operational efficiencies. The profit
with a software package, which has been developed way back in 1964,
The core operations like accounting and other sales modules were
CRM practices.
approach to the CRM business models. The fig 4.2 indicates that to
148
were looking at the uniform offerings, formats and locations to corner
the customer loyalty and these were being aided from the four pillars
philosophy.
Brand
Offer
Operations
Technology
Customer
Experience
Format Location
Loyalty
Organisation
The oil and gas sector is dominated by PSUs and a few large private
149
Figure 4.3: Competitive landscape for Oil and Gas sector in India (top
players)
approximately 67per cent of the total oil and gas production, whereas
150
such as Hindustan petroleum Corporation Limited (HPCL), Bharat
business, which in right earnest can be gauged from the fact that it
it believed will be the next sector after railway and air travel to hit the
only go up with the extra facilities that are offered such as food court
A1 Plazas served this segment well. Reliance has set up over 120
to reliable repairs. The plans were also drawn to put ‘Refresh’ –, up-
market eating joints inside select petrol retail premises, to cater the
about 150 retail outlets under the Qwik Mart brand name to come up
quick service, quick transaction store, which will offer the convenience
multiple offerings under one roof, speed of service and value based
sector and are key factors by companies in drawing plans for long-
152
4.4 PETROLEUM RETAILING INDUSTRY: NEW CUSTOMER
from each other. This will exert downward pressure on margins and
enabling new players to enter the market, which was once a fiefdom of
the public sector. The entry of new players like Reliance will grow the
4-5 years. This will reduce the average throughput per station, and
153
mechanism, prices will have to be lowered, thus reducing margins
by 2005 when GATT comes into force, the UAE market is likely to
account for over 95% of the retail fuel sales. Singapore is challenged
strong brand equity. To drive revenues and margins, the retailers will
154
themselves, especially during times when oil prices are high. Though
these products and services have been popular in the West, their
segments as being the most profitable and developed its products and
as outlined below:
as outlined below:
sell multiple grade fuels based on the octane ratings, with different
156
for less than 5% of the over3.3 billion liters consumed. This could be
coupled with the growth in large cars, the superior product based
activities.
Site Security: With expected new competition, site security is the key.
InUAE and India, with the expansion of roads network, the existing
possible, it is bestto close them and divert the resources for other sites
or activities.
157
Site Up gradation: The regional players have realized that having an
products and services, is the key to get customers to drive into their
in India and UAE have started renovating their existing sites, to offer
that need to be upgraded first and which could start offering higher
categories:
158
Convenience Stores: The concept of C stores though relatively new in
India, has got established in the UAE for past 3-5 years. However the
the US and $800 in UK. The average value per transaction in UAE is
confectionery & snacks (18%) and soft drinks(8%) are the leading
case in India, where there are cigarette kiosks at every nook and
the target customer traffic. This could also be in terms of offering fresh
159
Picking the product. Since operating C-stores requiredifferent set of
160
Auto Care Services: Auto care services complement the fuel services.
These include lube change, car wash, wheel & tyre services,
wash and auto care average around 7% and 4% of the total revenues
161
Ancillary Services: ATMs, laundry facilities, Internet access, mosques
(in the Middle East), etc. get the customer to drive into the station,
UAE also offer car testing, registration, and auto insurance facilities,
The idea is to make the petrol station into a destination for the
environment.
162
Customer Loyalty Programs: We have been discussing the subject of
these goals. The loyalty program ensures that the customer limits the
amount spent, locations used, etc. Companies can use this valuable
and profitability. Fuel Cards are being used in theUAE and recently in
customer.
163
CHAPTER -5
LITRATURE REVIEW
C., & Khorramshahgol, R., 2005). Moreover, CRM has been considered
the organization and the customer (Parvatiyarl, A., & Sheth, N. J.,
Therefore, the goal of the CRM is to discover, get, and hold customers
164
a major playing point of a specific endeavor. Also, we are endeavoring
corporate aggressiveness.
CRM can help to backing the relationship between a business and its
165
The essentials of customer relationship management developed from
been in use since the early 1990s. Since then there have been many
marketing.
166
Figure 5.1Customer Relationship Management
client more individually, and make them feel important for the
167
Identifying and focusing on the most significant customers,
customers,
loyalty programs).
168
According to M. Stanusha, the main purpose of the concept from this
customers, each time they have a specific need, theywould see only
value. JOtto said that company which wants to follow rules of CRM
concept should use all the means in order to precisely get to know
products can differ with type of relationship which company has with
169
systems. However to get full benefits, it is necessary to create
interactions which are based on trust between both parties and aim to
satisfying of their needs and even going beyond these needs and
trust.73
resources to gain insight into the behavior of customers and the value
help sales staff close deals faster, discover new customers and
understanding the nature and value of the relationships not only with
What are the origins of this approach? It is generally accepted that the
Review in 1985. This fact bears mentioning: the two researchers who
introduced the expression– one in the area of services and the other in
Finally, we must also mention the great Theodore Levitt, who in 1983,
seller”.
compare this definition with the one adopted before: “marketing is the
74Berry, L. (1983). “Relationship Marketing”, in Berry, L. Shostack, G. and Upah, G. (editors), Emerging
Perspectives
in Services Marketing, American Marketing Association, Chicago, IL.
172
Relationship marketing is based on the generation of a foundation of
customer relationships.
and prospective customers, and market relating tactics that are not
173
relationships) and the (necessarily) broader nature of CRM indicate
management (KM) initiatives are directed towards the same goal: the
How Smart Companies Use Them To Create Value, European Management Journal, 20, 5, 459 - 469.
174
relationship with KM approaches and technologies has widely been
175
service quality - which has been identified as an important
2004)78.
processes.
78Wang, Y. and Lo, H.-P. (2004) Customer-focused Performance and its Key Resource-based
Determinants: An Integrated Framework, Cr, 14, 1&2.
176
Up to now, there has been an abundance of publications to KM, which
autopoietic KM model.80
79von Krogh, G., Roos, J. and Slocum, K., "An Essay on Corporate Epistemology", Strategic Management
Journal, Vol. 15, No. Special Issue: Strategy: Search for New Para-digms, Summer, 1994, 1994, pp. 53-
71.
80von Foerster, H., "Principles of self-organization in socio-managerial context", in: Ulrich, H. and Probst,
G. J. B. (Eds.), Self-organization and Management of Social Systems, Springer-Verlag, Berlin, 1984, pp.
2-24.
177
Ontological KM models on the other hand view knowledge as a “black
dimension in 1994 and he tries to fully bond both views in his concept
of “BA” . 81
Marketing, sales, and service are primary business functions [26] with
81Wenger,E., Communities of Practice: Learning, Mean-ing, and Identity, Cambridge University Press,
Cambridge, 1997.
178
functional. A CRM business process involves the processing of
Based on [31, pp. 57 et seqq.] and our own action research experience
figure 5.2).
179
The contribution of this study lies in illustrating the successful
crucial elements within the CCC and service management. The CKM
With the implemented system the duration of ser-vice calls and the
the power they have on the market and that every activity is realized
for them. It is now easier to reach the products and services. Before
lower cost than their rivals the products and services that can meet
the customer wishes and expectations fully, so that they can render
have had to pay the prices of the errors and faults they do in customer
themselves had something to say and have themselves listened to. The
25) After the 2000s, with the increased use and effect of the internet
profits; and they are less sensitive to price increases, they generate
82Reichheld, Frederick and Thomas Teal (2000), The Loyalty Effect . Boston: Harvard Business School
Press.
83Verhoef, Peter C. (2003), "Understanding the Effect of Customer Relationship Management Efforts on
Customer Retention and Customer Share Development," Journal of Marketing, 67 (October), 30-45.
182
quality, service quality, and price or payment equity on loyalty. It also
CRM with technology. Although the market for CRM software is now
founded Siebel Systems Inc. Use of the term CRM can be traced back
to that period.
85Gamble, P., Stone, M. and Woodcock, N. (1999) Customer relationship marketing: up close and
personal.London: Kogan Page; Jain, S.C. (2005). CRM shifts the paradigm. Journal of Strategic
Marketing , Vol. 13, December, pp. 275–291; Evans, M., O’Malley, L. and Patterson, M. (2004) Exploing
direct and customer relationship marketing . London: Thomson.
184
Customer relationship management has been so pervasive that it has
organization and its products.” Others use the term CRM to refer to
business process.
CRM.
purchase decision.
satisfaction. Swan and Combs (1976) were among the first to argue
186
satisfaction as a discrepancy between the observed
Nicosia. 1986).
187
strong positive effect 011 customer loyalty intentions across a wide
certain business concerning its given products, the sales process, and
(Yeung and Ennew, 2001)88, found that satisfaction does not always
Anderson, Fornell and Rust (1997) could explain the mixed evidence
86Gustafsson Anders, Johnson Michael D..& Roos Inger. 2005, 'The Effects of
Customer Satisfaction, Relationship Commitment
87Kotler Philip. 2003. Marketing Management. Pearson Education.Inc. Fifth edition.
88Yeung, M.C.H. and Ennew, C.T. (2001) Measuring the impact of customer satisfaction on profitability: a
sectoral analysis.Journal of Targeting, Measurement and Analysis for Marketing 10(2), 106–16.
188
performance measures found by Yeung and Ennew (2001). Similarly,
1994; Griffin and Hauser, 1993; Fornell and Wernerfelt, 1987, 1988)
has found that satisfaction and market share are negatively related
89Bolton,
R.N., Lemo, K.N. and Verhoef, P.C. (2002), “The theoretical underpinnings of customer asset
management: a framework and propositions for future research”, ERIM Report Series Research in
Management, ERS-2002-80- MKT, ERIM, Rotterdam.
189
CHAPTER - 6
RESEARCH METHODOLOGY
2003:65)
research.
2003:111).90
90 Zikmund, W.G. (2003). Business research methods.7th edition. Mason: Thomson South-Western.
190
This study was conducted in two phases, in the first phase focus was
quantitative research.
India. The petroleum sector in the last 3-4 years has been presented
to rivalry and off late the customers have encountered a lot of people
new streets to bait them and change their buying propensities. New
players have entered into the field of petroleum marketing and have
have been arranged. The study looks for the business execution and
market pointers in the light of the aggressive elements and how the
91 Rootman, C. (2006). The influence of customer relationship management on the service quality of
banks. Unpublished master‟s dissertation. Port Elizabeth: Nelson Mandela Metropolitan University.
191
The skeleton has been planned at levels where endeavors of
customer were seen. The structure is focused around the prior work
of public sector oil organizations were focused around the start that to
with the fitting investigation of the writing and after that formalizing
the suitable questions, which have been replied in the research work.
The point was to create the extension, which will then be utilized to
serve meeting the research destination and sub targets. The following
and approved questionnaire was utilized for this. The data gathered
end goal to approve the research, the study was directed in Retail
92Reinartz,Werner, Manfred Krafft, and Wayne D. Hoyer (2004), “The Customer Relationship Management
Process: Its Measurement and Impact on Performance,” Journal of Marketing Research, 41 (August),
293–305.
192
In light of the preparatory study of the data, availability, technique for
operation and based the variables as said above, it was inferred that
the data might be gathered from the three significant oil organizations
gathering was hence limited to three organizations' i.e. IOC, BPC and
HPC. IBP Company has since fused with IOC and accordingly has not
Directing hypotheses and models are in short supply in the field, most
likely because of the truth that it is another range for examination and
due to its trade with IT and data systems, which have been quickly
creating. The focal examination question for this study is: Why and
how do CRM activities succeed then again fall flat? Inquire about
193
achievement elements for CRM activities are to be drawn from the
exploration discoveries.
empirical outcome of the study, the data collected from the customers
Region (NCR). Data has been taken from company’s internal records,
from Government of India records and also from sources, which from
used.
194
6.2SUGGESTED RESEARCH MODEL
which they live. Kaplan and Maxwell (1994) contend that the objective
a great extent lost when text based data are measured. Since one of
195
The Conceptual model for this study is gotten from the hypotheses
this study tries to inspect the CRM determinants and the business
and the business characteristics are then again genuine and they
thusly impact one another. The net result of the two likewise impacts
and also market share. The Market writing considers the sales
196
emulated by the fundamental study. The significant piece of the study
in India.
strategies, which was viewed as proper with the end goal of this study
leak into the study because of the data interface being the customers.
The present study has taken enough safeguards that such blunders
and inconsistencies don't set into the system. The premise of this
197
literature. The study has the premise of exploratory research strategy,
performance in public sector oil companies has been the topic under
93Kumar. Nirmalya, Lisa K, Sheer, and Jan-Benedict E.M. Steenkamp (1995), "The Effects of Perceived
Interdependence on Dealer Attitudes," Journal of Marketing Research, 32 (August), pp. 348-356.
198
Supplying to large number of LPG customers which the company
Supplying Petrol and diesel to the direct retails customer who are
To understand the CRM efforts of the company and how they have
impacted the business performance, the entire exercise has been done
with in the retail segment and therefore customer data has been
observation.
from important writing audit from papers, diaries, magazines and the
web. Essential data was gathered utilizing semi organized polls. These
surveys were built with both open and shut finished inquiries to
199
The Data regarding the oil company outlets have been arranged
focused around the data got from the Public sector oil organizations.
The data as for the retail outlet sales are accessible in the public
business system. While the data as for the name and their location
prelim any studies it was clear that the holding examples in the
bigger change on the result of the study if the holding examples was
not same.
classification of outlet for Public Sector Oil Company is that the outlet
location of the outlet and the offering made by the company towards
consequently, that these classes of outlets have been chosen for this
inspiration driving the study. At the point when this was done, the
surveys were circled to the help staff. The pro in individual made
individual make up for lost time to ensure that the entire surveys were
assembled back. This was done in a joint exertion with a chief or line
boss in control. This methodology was done while ensuring the part
201
ordered ness of the gave data. In this portion, the improvement of the
survey is inspected.
the things and the entire scale. Despite the fact that a portion of the
With a specific end goal to pick sampling units towards exact study of
literature.
The case might be the business execution of the company on the item
value, giving data, learning, and other value added services at their
with the customers. The data might be illustrative data for this
The sampled data on the CRM exertions has been collected from an
203
sampling, in that every component in the populace has a known and
of the populace. For this situation, the List of the customers as gave
by the dealer and the company utilizing the records was arranged as a
part of an in sequential order request for each one Retail outlet and
6.6 HYPOTHESIS
the variables are the significant concerns of the study. The study is
principally focused around the commence that the services by the oil
94Day,George S. and C. Van den Bulte (2002), “Superiority in Customer Relationship Management:
Consequences for Competitive Advantage and Performance,” working paper, Wharton School of
Business, University of Pennsylvania.
204
organizations are the -free variable- and fulfillment of the customers
productivity.
205
H3: There is a positive relationship between
station.
206
4. The demographic profile.
fit this particular context of research and thus they had gone through
managers or owners.
The questions have been kept to the minimum as possible, so that the
respondents will not find it difficult and boring to answer all of them.
through two pretests and checked twice by the supervisor. One of the
207
The Pilot Study - every questionnaire should be pretested. For this
designed for the pilot test were sent personally to the various service
improvement found during the test was taken seriously and used
208
CHAPTER – 7
RESEARCH ANALYSIS
7.1 INTRODUCTION
At the point when data begins to stream in, all the attention turned to
accumulated from the surveys, which were by then coded and created
for dismemberment. All the data was collected and the expert
study.
209
from the primary sources and also secondary assets were used
mentioned hereunder:
Multiple Regression -
as possible that are believed to affect the dependent variable. For the
number of times people visit the brand shops and a particular brand
variables.
95Albright, C.S. Winston, W.L. and Zappe, C. (2003) Data Analysis & Decision Making.2nd
Edition. California: Thomson - Brooks/Cole.
96Keller, G. and Warrack, B. (2003) Statistics for Management and Economics. 6th Edition.
California: Thomson - Brooks/Cole.
210
From above discussion multiple regression was chosen for analyzing
the survey data in this study. The advantage of this model is that it
for speedier, more flexible analysis, rapid testing (Curry and Moutinho
to Rogers (1992: page 6), this model has six key strengths as a tool:
provide a plus and minus error factor but, in practice, it does not.
technique.
residual analysis.
211
> Once developed, it is very easy to use.
technique.
residual analysis.
(i) For developing the model in this study, existing service stations
For the purpose of this study, this model will take the following form:
Y = f(M, S, L, C)
213
degrees of freedom (Hall 1994) because each time a variable is added
squares (Norusis 1993). Due to this, the standard error may increase
and the test of overall regression decreases and this will effect the
In the researcher's opinion, for this study the second approach using
For that reason, two approaches were adopted. Firstly, variables were
the industry and their opinions about the overall industry as a whole.
summaries of the variables are shown in Table 7.1. Our final sample
214
consisted of atotal of 80 managers/owners made up of 48
organizations.
The mean age of the sample as a whole is 40 years old; the youngest
among the sample is 25 and the oldest being 56. Of the total sample,
74 or 92.5 per cent is male and only 6 or 7.5 per cent is female.
For the service stations, the mean age of the station is 5 years old. As
previously mentioned, the sample came from the national oil company
215
Table 7.1 : Analysis Showing the Background of the Sample.
ON THE VARIABLES.
can produce results that are specific to the sample employed (Hall
1994)97.
When a regression analysis was run for VOLITRE with 0.05 as the
limit for variable inclusion, only five variables entered the equation.
However, when the limit was relaxed to 0.10, there are six variables
improve R2 from 0.84 to 0.86 and reduce the standard error from 0.78
to 0.75. From this test and discussion in section 7.3.1 above, the 0.10
significance was chosen because this study used a small sample and
97Hall,
Graham (1994) "Factors Distinguishing Survivors From Failures Amongst Small Firms in the UK
Construction Sector" Journal of Management. Studies Vol.31, No 5, September, pp 737-760.
217
the researcher was afraid that some of the important variables will be
such as Ingene and Brown (1987) and Acar (1993) also used this level
in their study.
The present question to be addressed is: how well does each of the
associated with volume of litre sold at the 0.01, 0.05 and 0.10 level of
dependent variable where the variation was not explained. In this case
only 9 per cent. The values for R2 and adjusted R2 are large in this
218
the value is relatively very high. However according to Morphet
(1991)98, the high value for Redoes not mean that large errors will not
equation.
the volume of litres sold. The amount of increase expected would differ
between each variable and performance. They show the nature and
measure. For example, the volume of litres sold model shows that a
98Morphet, Clive S (1990/1) "Applying Multiple Reg ression Analysis to the Forecasting of Grocery Store
Sales: An Application and Critical Appraisal" The International Review of Retail. Distribution and Cos
turner Research.Vol. I, No.3, pp 329-351.
219
increase of five hours in the business is expected to increase volume
Equation 1:
Note: For the equations the figures in the parentheses are t value
having an owner or manager which worked hard and have a few years
(LGSALESNP)-
the 0.01, 0.05 and 0.10 level of significance. This equation has a high
Equation 2:
221
Multiple R = 0.84 Adjusted R2 = 0.67
Note: For the equations the figures in the parentheses are t value
station (LCEMPGRO) -
was different from the previous two mentioned above, because this
222
takes a set of number of employee per age of station as the dependent
model.
223
This study summarizes the findings and models empirically tested in
of volume of litre sold among service stations in this study. Using the
equation first), there are seven variables in the equation. The variable
with the greatest effect are number of bays (0.26), type of ownership (-
7.2.
225
The regression equation characteristics of average growth in
enters the equation first), there are four variables in the equation. The
(1993) and Bates (1995), found that employees and capital was a
problem and good employees was very hard to find." While another
on, heads the list of problems". "My turnover is high and these
dealer.
226
Finally, the research analysis presented in this study indicate that
servicestations.
developed earlier. The hypotheses are divided into two groups: the
previous studies.
227
Hypotheses testing for internal environmental variables-
228
They said that the managers have knowledge of comparable firms'
variable because they believed the manager only had extensive first-
hand knowledge of each store and its environment that could not be
studies.
external and internal variables separately first and lastly both together
are perhaps due to the sample consisting of managers from the oil
hypothesis because many service stations cannot fully utilize the area
due to lack of capital or their plans was rejected by the oil company to
develop further the surrounding area of the stations. One dealer said
rejected because they (oil company) was not trust my capability to run
230
the project. My thinking was based on business thinking and the
oil company did not persuade their dealers to open the mini mart or
For the moment, the oil company itself did not have any concrete plan
other words, as many islands provided by the dealer, the dealer has to
employ more staff and at the end it will increase the overall cost. The
turnover is one of the main problems faced by the dealer. One dealer
while waiting for the more convenience jobs". Thus, our findings do
231
Hypotheses testing for external environmental variables-
front of the station, more change there will be patronizing the station.
and Simmons 1990), the results found here indicated that the number
Hedsen (1973), who found that the traffic flow is not significant
Hypothesis 5.
better. Thus, our findings do not provide any support for Hypothesis
6.
232
A Summary of the findings for all hypotheses is presented in Table
7.4.
Note:
233
CHAPTER - 8
CONCLUSIONS
oil & gas are used as the main sources of energy. Basic source of
234
Retail returns on electricity will probably be low, particularly if used
The oil and gas sector is fairly well developed in India, and is poised to
contribute large share to India’s energy basket over the next 15–20
economic growth are almost interlinked, the Indian oil and gas sector,
requirements, has been identified as a key metric that will drive future
GDPgrowth.
100 per centFDI in the oil and gas sector, enabling some large
235
This year’s Union Budget is expected to have a mixed impact on the
the other hand, the government has also exempted the basic customs
duty on the import of liquefied natural gas for power generation for
two years, and made oil and gas pipelines eligible for viability gap
changes made in it over the years; the past and present consumption
taking place in the Indian Petrol Market and the impact of these
way forward by taking Indian Oil Corporations a base. The study aims
The study also aims to trace the trends in the petroleum marketing in
236
marketing in the Indian petroleum industry, taking a case of Indian
Oil Corporation.
make it fruitful.
happen in light of the fact that marketing will profit immensely from
it. The lessons gained from past deliberations, both effective and
237
unsuccessful, of different marketing domains that have attempted to
researchers to sort out their own particular affiliation and their own
anyhow likewise the general experience which impact the buy choice.
238
Today, a brand's obligation is 'need satisfaction' as well as 'experience
satisfaction'.
without touching the tax rates would be the same for any given
might want to contend that regardless of the fact that the fiscal deficit
However, the policy of oil value deregulation even with climbing global
RBI (Reserve Bank of India) can buy new oil bonds and repurchase a
239
The macroeconomic effect of monetization would be precisely the same
also makes bigger fiscal space for more subsidies as an extent to GDP,
making it supportable.
The analysis of the primary data reveals that the customers see a
the relationship factors. The mean scores for each company is listed
below:
analysis. It implies that in the NCR region, the customer feels that the
240
new products filling to the enwer generation of fuels comes out in the
market, customers will first try to explore the same with company 1.
company 1 and 3. The reasons for visiting the outlets would be based
favor of the the convenient travel plan. However, given the choice on
While the mean scores for overall company are different, however,
that on all the five dimension, there is a difference among the outlets.
241
parameters for each company, and company’s can drawn inference
value they get from the company, rather than looking at the sales,
instance – amid that time, the petrol selling companies require not
that too at the same cost. In other words, the history of marketing of
242
control what's more protectionism. The marketing capacity, as well as
late a huge paradigm shift is taking put in the way petrol is constantly
what the future sees yet one thing is beyond any doubt that marketing
and identified the goals of their study to: (1) to conceptualize and
243
dimensions: relationship initiation, maintenance, and termination so
in the current research was based on the five dimension, The CRM
state of these CRM process and on a overall scale doe not guide a
linkage with the performance of the retail outlet and in turn with the
and incentives are not in place, it may be difficult for CRM processes
244
to produce the desired effects. Thus, it is not enough for a company
whether they can consolidate sponsorship with CRM. This study has
245
marketing encourages, customer understanding and focusing on,
all the more precisely. What ought to be noted is that how to let
customers control their data and how endeavor can shield it from
246
Speculations connected to CRM have been established in
satisfaction idea and significantly all the more profoundly into the
CRM activities that occur at retail outlets of oil companies and the
One of the key issues in front of the organizations is to create value for
248
everything in their power to enhance brand equity of the company and
benefits at the customer level and customers must see the value
CRM will be more technique driven, and therefore have the capacity to
take' for the CEOS will be that CRM is and might be a vehicle for
renaissance.
relative oddity of the item of the study (CRM activities) and the relative
249
It is hard to measurably test the proposed CRM model in a
the model.
The main future opportunities for the sector include assessing the
hydrogen and bio diesel. The sector must also lay greater focus on
250
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264
THE QUESTIONNAIRE
Dear Manager/Owner,
I am conducting a research and my chosen topic is “Customer
Relationship Marketing Practices in Indian Oil Corporation”. Part of
my research consists of a interview and survey of the leading
dealers/managers of petroleum and the information provided by you
will be used for academic purpose only. I would appreciate your
responses to the following questions. In order that the results
accurately represent all the stations, it is very important that each
questionnaire be completed.
It would be greatly appreciated if you could cooperate by answering
the questions and interview by myself or my representatives. It must
be stressed that any information or assistance that you give will be
kept confidential and will be used for academic purposes only. If you
are unsure, please answer to the best of your ability. Please tick the
box whenever applicable. Please write in Capital letters.
1. OBSERVATION DATA
Q 1. Number of islands
_______________
_______________
265
[ ] Residential area
[ ] Near shopping center
[ ] Other,(specify)____________________
2. BUSINESS BACKGROUND
_______________ Years
_______________ Liters
Q 1. The commission that you received from the oil company for one
liter sale of petrol for
Leaded __________
Unleaded __________
Diesel __________
266
Q 2. How much capital did you invest when you started in this
Retail business?
MR_______________________
Q3. What is the estimated value of your business asset now?
MR_______________________
MR_______________________
MR_______________________
Factors Rank
5. DEMOGRAPHIC DATA
Q2 . Sex:
[ ] Male
[ ] Female
Q 3. Marital Status:
[ ] Married
267
[ ] Divorced widowed
[ ] Bachelorlnever married
________________________________
________________________________
268
SERVICE STATION CHARACTERISTICS VARIABLES
269